Archive for the ‘ regular ’ Category

FreedomSoft Contract Crusher Fails – Here’s a Better Way to Automate Your Contracts

 

I recently had a discussion on Facebook with another investor and they were talking about the “Contract Crusher” online software offered by FreedomSoft.  These guys are expert marketers because they do a great job getting their information in front of everybody myself included.  So, I have to admit I was intrigued by their offer to provide this free “Contract Crusher” software.  Their marketing makes it sounds like Contract Crusher will revolutionize how quickly you can create and send contracts.

Well, I checked it out, and quite frankly I was not impressed.  Their software gives you the ability to upload a contract to their online portal and then point and click where you want to add your information to the contract.  They do have a nice feature that allows you to email or fax the contract right from the web portal, but here’s why I’m not impressed.  If you have your contracts written up in Microsoft Word (or any other word processor software for that matter) you could do the same thing by putting the information in with text boxes…that’s essentially all they’re doing.  I’m not sure how this makes it more efficient for you.  And, if you’re a little more savvy with Microsoft Word you can create a “Form”, and then you’ll just be able to tab between each of the fields to fill the information in.

So all things consider, I’m giving Contract Crusher a failing grade.  I also think I have a better way for you to create your contracts because my method AUTOMATICALLY fills out your contract while you complete your due diligence on the property.

Here’s how…

When I take a look at a property I start off like many do taking a 30,000 foot view of the property.  For instance, if we’re looking at a rehab property I use the following formula:

Purchase Price = 65% x ARV – Repairs

If I think the seller may accept a purchase price given by this equation then I’m going to do a more in-depth analysis.  I start a property analysis using an excel spreadsheet I created.  The spreadsheet is organized with the following 5 tabs:

  1. Tab 1 – Property Information – Includes property address, seller name and phone number and date of analysis
  2. Tab 2 – Property Inspection – Includes property inspection report including summary of required repairs.  The output of this sheet is an estimate for the total cost of repairs including labor
  3. Tab 3 – Comparative Market Analysis – Includes information about subject property, data on sold properties, pending properties and listed properties.  The output of this sheet is an estimate for the After Repair Value (ARV).
  4. Tab 4 – Property Cashflow – Even if the primary exit strategy is a rehab we always do a cashflow analysis in case we “get stuck” with the property.  The output of this sheet is the cashflow the property will generate if rented.
  5. Tab 5 – Rehab Analysis – This tab includes a summary of the purchase costs, holding costs, repair costs, & selling costs associated with the rehab.  The output of this sheet is the maximum purchase price and the expected Return On Investment (ROI) for the rehab.

 Now, we have a standard contract for purchase that we use, and it requires that we fill in the following information:

  1. Seller’s Name
  2. Property Address
  3. Purchase Price
  4. Date
  5. Signature

Well, it occurred to me that for every property I analyze that I have already input this information into my analysis.  So, I created a 6th tab with the purchase agreement on it.  The power behind this is that I can link the cells in the purchase agreement to the other 5 tabs and as I fill in my analysis on the property the purchase agreement is AUTOMATICALLY filled in.  For example, in the area of the contract where the property address needs to be filled in, I just pull this information from Tab 1, and the purchase price is pulled from Tab 5, etc.  If the analysis I put together looks good, then I just print the purchase agreement and fax it, or I can print it to a PDF and email it.

One more thing I should mention is that I even went so far as to add my signature to the document.  To do this I simply signed a piece of paper and scanned it in using my scanner.  Once scanned in, I was able to save it as a picture file.  Then I just inserted the picture into my purchase agreement tab in Excel.  It took about another 30 seconds to crop, resize and move the signature to the right spot on the contract, but now I have a contract that fills itself out and is already signed.

My next step is to put together additional contract that I frequently use and have them automatically populated as well.  (Assignment of contract, mutual release agreement, contract addenda, etc.).

I think the guys from FreedomSoft had the right idea to take this to a web application, but perhaps they should redirect some of their marketing dollars to create a piece of software that has a little more capability…currently I’m not impressed…

Getting Started in Real Estate Investing – Part 7 – Just Do It!

Today we are going to continue our series on Getting Started in Real Estate Investing. In previous posts, we talked about:

Today in Step 7 we’re going to show you nothing.  You just need to get out there and do it.  You need to get out there, look at property, start submitting offers, and closing deals.  Just do it!

What we have talked about in this series is all about building the foundation for your real estate investing business.  We have shown you the steps, you just need to take them.  It’s really easy to go out and get educated, talk to people, run numbers on your finances, set goals, etc. but when it comes down to putting offers in and pulling the trigger on the deal, well you just have to do it.

Every deal you do is going to be slightly different.  There is no such thing a standard deal.  You’re not going to have all of the answers and there will always be risk with every deal that you do.  Your job as an investor is to conduct an appropriate level of due diligence on every deal so that you can gain a comfort level with the risk that is still there.  At that point, you just have to take the plunge and trust that you’ve done your homework correctly.

What you will find is that each deal you do becomes a little bit easier.  The first is always the hardest but you will learn a tremendous amount.  Your second deal will be even easier, and by your third deal, you will start to feel comfortable with what you’re doing.  You just need to get started.

Now, I don’t want to sugar-coat things.  Everything isn’t going to go smoothly all the time.  There will be challenges, but to me, that’s half the fun.  There is no better feeling at the end of the day when you close on a property.  You can go to the property stand in the yard, and say I OWN THIS!  It’s one of the greatest feelings in the world to purchase real estate, and if you can get over the fear of the risk involved, you really can do some amazing things.

So, I wish you well in your investing, and if you have any questions, please don’t hesitate to contact me.  I would be happy to help you in your endeavors…

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We Have a Deal, But No Money…Just Yet

 3 bed / 1 bath Brick Ranch with Basement & 2-Car Garage

As we talked about earlier in the week, we spent the good part of this past Saturday putting together the numbers on a rehab in Waterford, Michigan, and the numbers looked good.  The property shown in the picture above is a great little 3 bed / 1 bath brick ranch with a full basement and 2-car garage that really just needs some updating.  The house is solid from top to bottom with no structural issues and the roof is great.  Everything is telling us this is a great little property, and so we submitted the offer on Saturday night. 

Since then we’ve been back and forth with the seller, and right now we’re at a bit of a stalemate.  Originally we had planned to put the property under contract with a financing contingency because we were planning to fund the deal through a hard money lender.  With the analysis we have put together I am confident that we could obtain the funding, but I cannot be 100% certain, so we need the financing contingency.  This is a major issue for the seller, and they are requesting a $5000 deposit with no contingencies on the offer.  In addition to this, they are asking that we close in 14 days. 

Unfortunately, we’re not in a position to put the property under contract right now, but if we are able to locate private funding, we could easily snatch this deal up and be off and running with the rehab.

Right now we’ve completed a full analysis of the property and we’re reviewing this analysis with a few private lenders.  We don’t have the funding lined up just yet, so if you are interested in partnering with us on this deal,  we would be happy to discuss the full details with you as well.  For now, here is a summary of the numbers:

  • After Repair Value = $95,000
  • Purchase Price = $38,000
  • Purchase Costs = $1,700
  • Repairs = $21,400
  • Holding Costs = $2,400
  • Selling Costs = $7,600

Potential Profit = $23,900

To see our full analysis, you can download it here.

If you are interested in partnering with us, please feel free to contact me at todd@michiganpropertybuyer.com or give me a call at 248-917-4416.

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Status Update on Our Deals…

Welcome back. Today we just wanted to give you an update on the deals we’re working on. We’ve had a lot of activity over the last week, and we just want to catch everyone up. So here goes…

Pontiac Turnkey Opportunities

As we have been talking about in recent blog posts, we have been focusing on our business plan to set up turnkey rentals in Pontiac.  We have been focusing on a number of different aspects of setting up this business including finding properties.

Last week we started on Monday and went through the following progression to find deals.

  1. We had our realtor send us a list of properties that met specific criteria that we were looking for.  The list she send had approximately 30 properties
  2. We reviewed this list and found about 15 properties that had “potential” based upon their size, price, condition and most importantly location.
  3. Kelly did a drive-by on these 15 properties and we decided to look at 4 of them.
  4. Of the for, we have submitted offers on 3 of them and we’re waiting to hear back on the offers.

This week, we have begun the same process although the list we start from will be smaller because there aren’t as many newly listed properties on the list.

Rehab Opportunity in Waterford

Kelly was approached last week by another investor that contacted her through one our ads on Craigslist.  Initially we didn’t like the property because of the list price, but the investor then told us they would take considerably less and gave us a target price to shoot for. 

So, we ended up doing a complete analysis on the property included determining the repairs necessary, conducting a market analysis of the property, and determined our return on investment.  After all of t his we were able to submit an offer on the property lat Saturday evening.

The numbers we have are looking pretty good, and we submitted a full price offer, so stay tuned to see how this one turns out…

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Getting Started in Real Estate Investing – Step 6 – Find a Mentor

Today we are going to continue our series on Getting Started in Real Estate Investing.  In previous posts, we talked about:

Today in Step 6 we are going to talk about building finding a mentor.  Without a doubt, one of the biggest things that prevents people from moving forward to invest in real estate is fear.  Fear holds us in check seeking out more information to “make sure” that we are doing things right.  Now, fear does serve a purpose because we don’t want to be foolish and do something we would regret, but there is certainly a point when fear can start to hinder you.  You have to get your arms wrapped around the concept of learning by failure. 

Take a look back at everything you have learned in life.  You learned to walk by falling down, you learned to ride your bike by falling down.  Falling down is inevitable, and it is the natural way for us to learn.  In fact, if you think back about your failures in life, you will find that those were some of the best lessons you ever learned.  Of course nobody likes to fail, and there is a way you can give yourself a safety net.  When you were growing up your parents probably acted as your safety net more than once guiding you and preventing you from falling down too hard.  When you started a new job, your boss probably wated over you to make sure you didn’t screw things up.

Well, real estate investing is the same way, except most of us don’t have parents or bosses that are there to guide us.  So, we must seek out different individuals.  We call them mentors, and it is in your best interest to find one and speak with them regularly about your dealings in real estate.

So how do we do this?  Well, there are plenty of folks out there willing to have you pay them to be their mentor.  This is a plausible solution, but I would not recommend it, because if you work at it, you can find a mentor that will work with you for free.

You see, mentors aren’t just sitting out there waiting for grasshoppers to come along for them to instruct.  You really must approach it differently.  You have to network.  Go to REIA meetings and talk to people.  Join the real estate conversation on Facebook & Twitter.  After getting involved, you very quickly start to see who the people are that you NEED to be developing relationships with.  Start talking to them and building relationships with them.  Add to the conversation.  Focus on adding your value with well thought out questions or responses. 

You see, it’s really all about building relationships with the right individuals.  And when the time comes, you should ask them to sit down with you to review a deal, or a business plan, or whatever.  In most cases they will gladly do so, but you MUST build the relationship first.  It’s really that simple…focus on relationships, and the mentors will appear.

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Tools to Use In Your Real Estate Investing Business

Mark Ijlal is a real estate investor in Michigan that has been writing his blog Michigan Foreclosure Report by Mark Ijlal for quite some time.  Personally, I have found his articles to be spot on and straight to the point.  Mark has an excellent ability to relate real estate investing to many facets of life and really drives his points home with his unique writing style.  In his latest blog post, Mark provided a great list of Tools He Cannot Live Without in his real estate investing business.  As I expected this was an excellent article listing several useful tools Mark uses.  I have used many of these tools myself, and I’m sure I will look at using some of the others in the very near future.  It was really a great article, and I wanted to post a comment to Mark’s blog, but unfortunately Mark does not accept comments on his blog.  So instead, to followup on Mark’s blog post I decided to offer additional tools that I cannot live without in my real estate investing business.  Here’s my list…

GADGETS

Mark mentioned that he uses a Kodak Zi8 flip camera to shoot videos of houses to make video tours.  I have this same exact model and it really is a great little camera.  It takes video in high definition, takes still photos, and to download them it actually has a USB port that flips out and you just plug it into your computer.  This feature is nice because you never have to worry about losing the cord.  In fact it’s so easy to use, I found my 4-year-old daughter making her own videos one day.  So go out and get yourself one of these cameras, it’s a great little tool. 

In addition to a flip camera, I would recommend the following gadgets that I cannot live without:

  • Laptop Computer – I will never buy another desktop computer again.  To me they are dinosaurs of the computer age.  A laptop is so much more practical to use for the simple fact that you can take it anywhere.  I use my laptop with every aspect of my business and would not be a real estate investor without it.
  • Smart Phone – Next to my laptop, my Blackberry is the gadget I use the most.  I’m really not sure how I was able to manage things for so  long without it.  The ability to have access to your email, outlook calendar, phone, and internet all in one handheld device is great. 
  • GPS Unit – We bought a Garmin earlier in the spring because we were driving down to Florida for vacation.  It certainly came in handy during that trip, but I thought it would not be very useful after that.  I was dead wrong.  We use the GPS unit everytime we go and look at a house.  You just get in the car and go…no looking up maps or directions on the internet…just get in the car and go.  We’ve used it so much that we just purchased a 2nd GPS unit, a Garmin 295W.  This one is a little more sophisticated as it has the ability to access the internet and also take pictures.  The camera feature is particularly useful because it actually “Geotags” the photos with the location of where the picture was taken.  This is extremetly useful when you combine this technology with Google Earth software.
  • MP3 Player – Most people use MP3 players to listen to music, but I use it for education.  My drive to work each day takes about an hour, and I have listened to countless audiobooks using my MP3 player during my commute back and forth to work.  This has proven to be a very effectient use of what would otherwise have been wasted time.

SOFTWARE

Mark mentioned that he cannto live without Quickbooks to keep track of his finances.  I currently use Quicken, but as Mark said, your CPA uses Quickbooks and that is exactly who told me I need to switch over.  I think I’m going to ride out the rest of the year with Quicken and then startup in the new year with QuickBooks at the beginning of the new year.  In addition to QuickBooks, here are few pieces of software that have been invaluable to me.

  • Google EarthThis is a free application offered by Google, and quite frankly it’s one of the coolest pieces of software I think I’ve seen.  If you want to check out mount everest, you just type it in, and the globe spins taking you to Mount Everest.  So you can have fun with the software, but you can also use it in your real estate investing business.  The nice thing about Google Earth is it allows you to plot locations on the map, create notes, etc.  Kelly and I have used it extensively to map out the areas we are investing in, and it provides a great way to help understand the market.
  • PDFEdit995I’m sure everyone has opened a PDF file before.  The nice thing about PDF files is that they cannot be changed, and when writing contracts or official documents they work out very nicely because you know that nothing can be changed on the doucment after you sign it.  The person you send it to can only open it and print it.  If they want to make changes to the contract, then they will have to write them in, and you will know exactly what was changed.
  • Microsoft Office - Excel, Word, & Powerpoint are a must to have, and I think this goes without saying.  Being an engineer, I’m a little partial to Excel because I think you can pretty much do anything in Excel.  We have used it to create a template property analyzer that contains all the sheets we need to fully analyze a property and write a contract.  In fact, it automatically populates the contract for us once we fill in the owner’s name, address, etc.  The sheet includes a market analysis form, a cashflow analysis form, a repair estimate form, a rehab analysis form, a loan amoritzation calculation form, and the purchase agreement.  We systematically fill out each page, and they are all linked which creates a complete analysis for the property.  When submitting an offer on any property I’m confident of the numbers because I know they were calculated correctly.

WEBSITES

Mark mentioned several websites in his post – some I’ve used and some I haven’t but probably will very shortly.   Below are some additional websites that have proven to be extremely useful for us.

  • BatchGeo.com - This is a really cool website to use if you have multiple properties that you want to go and look at.  You just create a list of the addresses in Excel of the properties you want to map, and then you just copy and paste this list into BatchGeo.com.  Hit submit, and BatchGeo maps each of the properties.  This makes it really easy to figure out which property you should see first, second, third, etc.  In addition to this, BatchGeo has a feature that allows you to download a “.kml” file which you can read into Google Earth.  This makes mapping multiple properties in Google Earth very easy.  Check out our post Getting to Know the Pontiac Real Estate Market to see how we’ve used BatchGeo.com in conjunction with Google Earth.
  • WordPress.comOf course this is the platform we use to host our blog.  We actually started out on Tumblr.com but found that WordPress has many more useful features to it, so we moved over to WordPress.  This blog has aided us in so many ways, and I would encourage everyone to try blogging in their real estate investing business.
  • TubeMogul.comTubeMogul is a website that allows you to upload videso to multiple different websites simultaneously.  When people think of web videos, most think of YouTube, but there are actually many more video hosting sites out there.  Sending your videos to multiple sites increases the exposure level, and TubeMogul makes it very efficient to do this.
  • Facebook.comEveryone knows about Facebook, and if you’re not using it in your real esate investing business, you really should.  The possibilities are truly endless.  Check out our post Use Facebook to Promote Your Real Estate Business to see how we are using Facebook.
  • RealInvestorWebsite.comThis website really caters to real estate investors, and it is the hub of all our website activities.  They have many templates setup that are geared towards setting up websites for real estate investors.  Their web interface is really easy to use, and if you don’t know how to do something they have a great video resource library showing you exactly how to do everything on the site.  The nice thing is that they will host up to 10 different websites for you for one low fee of $27 per month.  I know 10 sites sounds like a lot, but when you have a main site, several squeeze pages, and a couple sites dedicated to particular houses you’re trying to sell, you’ll find yourself wishing you had more sites available.

OTHER BUSINESS ESSENTIALS

Mark mentioned how to setup an LLC, and the forms you might want to have ready at a moment’s notice.  In addition to these things, you should really think about the following things:

  • PO Box – A PO Box is very handy for keeping security in your business dealings.  You don’t want everyone under the sun to know where you live, and a PO box is a very handy tool to help you accomplish this.
  • Separate Bank Account – As your CPA will tell you, you need to keep all of your financials separate in your business dealings.  Therefore it is imperative to obtain a separate bank account.  Follow Mark’s suggestions on setting up an LLC (or another entity) and obtain a Federal EIN number, and you’ll be all set to go to the bank to get a bank account.

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Real Estate Investors – The Time to Invest In Detroit and Southeast Michigan Real Estate is Now

With the burst of the housing bubble, home prices have fallen dramatically and Michigan has been one of the hardest hit markets in the United States. This might just make Michigan one of the best markets to invest in right now.

It’s no secret that the struggling automotive industry has caused widespread job losses throughout Michigan, and as a result, foreclosures have driven Michigan housing prices down more than 60% since 2006.  According to Realty Trac, foreclosures account for 33% of Michigan’s home sales through the 2nd quarter of 2010, and this trend is expected to continue through 2011. For real estate investors these foreclosures represent an excellent opportunity to purchase property at a steep discount.

The Michigan economy is not out of the water just yet, but there are some very encouraging signs indicating that things may be turning the corner.

1. Detroit‘s Automakers Are All Producing Profits

It is no secret that Michigan’s economy is heavily tied to the automotive industry. In recent years, the automakers have struggled tremendously, but the restructuring is starting to take hold. In the 2nd quarter of 2010 all three of Detroit’s automakers were in the black posting the following profits: 

  • Ford – $2.6 Billion 
  • General Motors $1.3 Billion
  • Chrysler – $183 Million 

This is welcomed news for the Michigan job market as these profits have already resulted in renewed investments into Michigan’s economy. The Michigan Economic Development Corporation reports that 17 of the world’s leading electric battery companies are investing $5.8 Billion into Michigan. This includes a $43 million investment by General Motors for a new plant that will manufacture the batteries for the Chevy Volt – the automotive industry’s first fully electric vehicle. These investments are expected to create approximately 63,000 jobs.

2. The State of Michigan Has Provided a 42% Tax Credit to Film Makers

In April 2008, the state of Michigan announced a 42% tax credit for film makers that produce films using Michigan workers. This has spurred a flurry of film making activity. Before the incentive, Michigan averaged five film productions annually. In 2008 thirty-one films were produced, and in 2009 thirty-five films were produced. This trend is expected to continue with the announcement of 3 major studios to be built in Pontiac, Detroit, and Grand Rapids. These studios alone are expected to bring 6500 permanent jobs to Michigan.

3. Investment in Renewable Wind Energy

Because of Michigan’s vast coastlines along the great lakes, the wind potential is phenomenal. Michigan has enacted the Renewable Portfolio Standard which requires 10% of the state’s energy demand to come from renewable resources by 2015. This standard is sure to drive investment into renewable energy resources in Michigan.

The Time to Invest in Michigan Is Now

All of this economic activity is sure to result in the appreciation of Michigan’s deflated housing prices. In fact, Yahoo Real Estate is projecting that the Southeast Michigan real estate market will appreciate by 33.1% by 2014!

For investors, the time to invest in Michigan real estate is now. Fortunately, investors do not need to live in Michigan to participate in this market.  Companies like Michigan Turnkey Investments are setting up cashflowing turnkey investment properties for out-of-state investors. These properties are solid investments that boast returns from cashflow in the range between 13% – 20% annually.  With these kind of returns and the prospect of heavy property appreciation, it’s a no-brainer – the time to invest in Michigan real estate is now.

Turnkey Rental Properties in Pontiac, MI

In today’s blog post we are just going to give you an update on some of the things we have been focusing on over the past couple weeks.  We are changing our focus a little bit and we’re developing a business model for turnkey rental properties.  Our focus will be on Pontiac, Michigan, but we will look at any property in Southeast, MI.   So here’s what we’ve been working on to build this business…

Focus on Systems

First off, with everything we are doing in setting up this business we are focusing on systems.  Our plan is to have multiple properties in various stages of the turnkey process (negotiating, buying, rehabbing, tenanting, selling), and to manage all of this we need systems in place to ensure our operation runs smoothly.

Business Plan

Our first step is to lay out our business plan.  This plan has our ideas organized on all of the following:

  • A description of the product we are selling – Turnkey Rental Properties
  • Our pricing strategy for selling
  • A description of the “Target Property” we are trying to buy
  • Locations for where we want to buy
  • The price we need to buy for
  • Our formula for rehab
  • Our plan for how we will sell the properties

Marketing

We are putting together our marketing plans to generate leads for buyers.  We are going to focus on out-of-state and international buyers because they will benefit the most from what we’re doing.  Because of this, the majority of our marketing for buyers will be online.

Market Research

As we wrote about in our post “Getting to Know The Pontiac Real Estate Market” we are spending a lot of time researching the Pontiac market.  We are looking at homes, studying the rental market, and determining the best areas to invest in Pontiac.

Meeting With Investors

To fund our deals, we need money, and to do the kind of volume we want to do, we are going to need private investors backing us.  To communicate our ideas, we have put together a business plan that we are sharing with investors, and we are working with them on an equity sharing relationship in the business.

Business Structure

As with any business, you want to be setup correctly to maximize your tax benefits, and minimize your exposure to liability.  We are meeting with CPA’s to develop our business structure to accomplish these things.

So as you can see we’ve been very busy getting a bunch of stuff setup.  Stay tuned for more…

Getting Started in Real Estate Investing – Step 5 – Build Your Power Team

Today we are going to continue our series on Getting Started in Real Estate Investing.  In previous posts, we talked about:

Today in Step 5 we are going to talk about building your power team.  If you’re just starting out in real estate investing, you should wrap your arms around the fact that you cannot do everything yourself.  I know a lot of people, myself included, struggle with this.  When starting out, you probably want to know every detail of what you’re doing and you’re eager to learn the business.

However, there aren’t enough hours in the day for you to learn about everything or do everything that you need to do.  Rather than fight this fact, you need to embrace it.  I know personally it took me a long time to figure this out.  I was always the guy that spent time figuring things out and doing things myself.   However, eventually I realized that I spent so much time learning and doing that I could only do so much.  There are only so many hours in a day.  So, I needed help, and you do to.  The good thing is that there are many people out there that are looking to help you.  They will be charging you money for their services, but look at it this way.  If you can do one deal, and make $10,000 doing everything yourself, and it takes you 6 months to complete the deal that’s great.  However, in that same timeframe, if you could do 10 deals but you only made $5,000 per deal because you paid for help, doesn’t it make more sense to pay for some help.  You will net $50,000 in that same time, doing the same amount of work.

You see, the key to doing more deals is building a team of individuals or companies that you can go to at a moments notice and know that they are going to be able to answer questions, provide services, or just simply help you get out of a jam.  Below are a list of individuals or companies you should have on your team:

  • Other Investors
  • Mentors
  • Title Agents
  • Mortgage Brokers
  • Bankers
  • Hard Money Lenders
  • Attorneys
  • Contractors
  • Real Estate Agents
  • Property Managers
  • Home Inspectors
  • Accountants
  • Bookkeepers

As the list indicates, it is normally a good idea to have more than one team member for each category.  For example, if you have one contractor on your team, and you go to them to look at a rehab that you’re going to do and they’re tied up on another job, you’re going to be stuck without a contractor.  Or, if you’re looking for money, many times one banker or hard-money-lender will be limited by the programs they have to offer.  However, each lender has different programs available, and the more relationships you have, the more options you will have available to you.  Like they say, it’s not who you are, it’s who you know.

So how do we build a power team?  First off, please do not go to the yellow pages or Google and start searching for team members.  This is probably the worst thing you can do because you have no idea whether the person or company you find is reputable.  The best way for you to find team members is simply through networking.  Every team member you find should come through a referral by someone you know.  This is important for a few reasons.  First of all, the person you got the referral from has likely done quite a bit of business with the person they are referring you to.  This is invaluable because they have already completed the screening process from you.  If the person wasn’t worth their salt, they wouldn’t refer you to them.  Secondly, when you go to this person, and you tell them you were referred by another investor, it helps give you credibility because you are associated with this other investor. 

Now, if you’re still struggling, I can tell you by far the best way to network on a daily basis is to get on Facebook and join the conversation on real estate investing.  Awhile back we dedicated another post to Facebook that you can find here, so I won’t go into details on the things you can do on Facebook to build your team.  However, I will mention one thing – focus on the quality of the conversations you have with the people you meet.  This is not a numbers game, it’s about building relationships.  Remember, Facebook is a social network, and people expect to have excellent conversations on there.  Do this, and you will build relationships that will enable you to build your power team very quickly.  This one single resource has helped us build a great power team in literally less than a month’s timeframe.

So get our there and start building your team!

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Getting to Know the Pontiac Real Estate Market

Last week we told you about our plans for Real Estate Investing in Pontiac, and over the weekend we spent a good amount of time getting to know this market.  So, how did we do that?   Well, quite frankly we got in the car and we started driving around, and boy were we surprised!  For those of you that know Michigan, and particularly Pontiac, please put an image in your head of what the average house in Pontiac looks like.  I pictured seeing neighborhoods filled with run-down homes, with boarded up or broken windows, and lots of overgrown weeds and tall grass.  Houses like this:

Well we did find houses like that, and in fact that picture was one of the houses we saw.  But like I said we were surprised…we were surprised because we also found houses like this:

In fact, we saw whole neighborhoods filled with houses like this.  Now, I’m not going to sugarcoat things.  We did find areas of Pontiac that were exactly what we expected, but the big takeaway was that there really are some great areas of Pontiac to invest in. 

So, having all this first hand knowledge is great, but it’s really easy to forget the areas we drove around in, so we spent a lot of time documenting the various areas we drove through.  Here’s how we did it:

  • We systematically drove through neighborhoods covering many parts of Pontiac.
  • As we drove around, we noted all of the vacant properties and the homes that were for sale.  For each of these homes we took the address, phone number (if listed), recorded comments about the house, and took a photograph.
  • After we got home, we put organized all of this information into a spreadsheet

So, this was helpful, but it still didn’t give us a clear indication of where the good areas of Pontiac were.  We essentially had a list of properties and comments about them, but it was hard to really put it all together.  So how could we make better use of this information to make it immediately clear where the good areas of Pontiac were?

Well, the answer was to put the information on a map.  Now, we had approximately 75 different properties that we documented, so it was going to be pretty tedious to map each of them, and I figured there had to be a web application out there that would map multiple properties at once.  Well, as it turns out there is.  I found a great little website called BatchGeo.com.  This website allows you to take your list of addresses, copy them into the website, and it maps them all at once.  And, as if that wasn’t helpful enough, you can also add categories of information (i.e. our comments about the houses) that will show up on the map when you click on each map points.  So, after using this site, we ended up with a map that looked like this:

This worked out perfect great!  We now have a map that we can really start to analyze.  But it got even better when I noticed something.  See that little button that says “Google Earth KML”.  If you click this button it allows you to save a file of the plotted addresses that is readable by Google Earth.  If you haven’t heard of Google Earth, click on the link and download the software.  It’s free, and I think it’s one of the coolest pieces of software that Google has put out. 

So I saved the file, and then loaded it into Google Earth and it worked!  All the addresses were plotted perfectly in Google Earth.  This was a big step forward because now we have a map that we can continually update as we learn more and more about the Pontiac market.  The other great thing is that Google Earth has lots of cool features that allow you to customize your maps.  So, to help us visualize where the good areas were, we started to look at our notes about each property on the map, and we were able to see the patterns of where the good areas were.  So using Google Earth we started to draw red, yellow and green zones on the map using the “Polygon” feature.  This feature allows you to outline areas, and you can color-code these areas with a transparent color.  So here is what our current map looks like with all of the zones we have researched: 

Note: the actual map has the zones color coded red / yellow / green to indicated the bad / questionable / good areas of Pontiac.

This was an excellent exercise for us because in a relatively short amount of time, we were able to learn a great deal about the Pontiac market.  Plus, we now have a great tool that we can use anytime we come across a new property.  We can just map the property in Google Earth, and we’ll know immediately whether we want to consider investing in the property.

So stay tuned…more to come on Pontiac investing…

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